Drugmaker Allergan has been hit with a suit in federal court in Newark accusing it of scheming to block Medicare prescription plans from covering a drug made by competitor Shire U.S. for treating dry eyes. Allergan, maker of Restasis, is able to exclude Shire’s competing drug, Xiidra, from Medicare Part D plans by offering plan administrators substantial discounts on a wide range of other drugs that would be lost if Xiidra were allowed on their formularies, the suit claims.
The suit, filed on Monday, brings counts for monopolization of trade, attempted monopolization and agreements in restraint of trade under the Sherman Act and New Jersey law, and tortious interference with business relations. Shire seeks a declaration that Allergan’s conduct violates the Sherman Act and state laws, and an injunction against further violations, as well as fees, costs and other relief deemed just by the court.
Shire, based in Ireland but with U.S. headquarters in Lexington, Massachusetts, says Xiidra, approved in July 2016, has only found a 10 percent market share for Medicare users while it enjoys a 35 percent market share among users on commercial health plans. That’s because Shire competes on a “level playing field” in the commercial market but Allergan “set a scheme in motion” to ensure its product kept its market-leading position after Xiidra was approved in 2016.
Actress Jennifer Aniston suffers from dry eyes and is a spokeswoman for a campaign sponsored by Shire to educate consumers about dry eyes, according to the website FiercePharma.
Restasis has been on the market for 15 years. According to the suit, Allergan’s CEO stated publicly this year that the company has “blocked” Shire from the Part D market.
Allergan is able to shut Xiidra out of the Part D market because “by including Xiidra on their formularies, the plans would immediately lose substantial discounts and/or rebates across a large portfolio of Allergan drugs. The loss in value of Allergan’s discounts and/or rebates to the Part D plans is so substantial that it is impossible for Shire to gain formulary access for Xiidra, no mater what financial terms it offers,” the suit claims.
Shire says it has offered the Part D plan discounts on Xiidra that are far greater than the terms offered to commercial prescription drug plans but to no avail. According to its suit, one unidentified plan administrator, when discussing the impact of Allergan’s wide-ranging discounts, said “you could give [Xiidra] to us for free, and the numbers still wouldn’t work.”
Under Medicare’s Part D prescription drug plan, 40 million participants receive coverage from private companies who contract with the government to serve as administrators, the suit said.
Allergan’s U.S. sales of Restasis to Part D plans in the year that ended in June 2016 was $719 million, and the company sold another $750 million worth of three glaucoma drugs, Lumigan, Combigan and Alphagan P, according to the suit. “Thus, the glaucoma drugs alone provide Allergan with more than enough financial wherewithal to give the plans discounts and rebates that far exceed anything that Shire could offer on Xiidra, including giving it to the plans for free, and allows Allergan to offer Restasis to the Part D plans at an effective price that is below Allergan’s average variable cost,” Shire’s suit said.
Allergan, also an Irish company with U.S. headquarters in Parsippany, issued a statement disputing the suit’s allegations.
“There is no merit to this lawsuit. Allergan operates in accordance with all CMS Medicare Part D policies and regulations. In our negotiations with Medicare Part D sponsors, we are competing on value and price, and competition in the chronic dry eye therapeutic market has driven pricing down for patients and payers in Medicare Part D and commercial plans,” the company said.
“Restasis continues to provide significant value to Medicare beneficiaries, providers and the Part D program for the treatment of chronic dry eye disease,” company spokesman Mark Marmur said in a statement.
Charles Lizza of Saul Ewing in Newark, representing Shire, did not respond to a request for comment about the suit.